Markets Drop but AI Stock AppLovin Explodes 29% After Earnings

Market Overview

On Wednesday, US markets closed mixed, with the Dow and S&P 500 slipping, while the Nasdaq barely managed a gain. Stronger-than-expected US CPI data fueled concerns about rising inflation, weakening expectations for Fed rate cuts. Meanwhile, investors continued to monitor Trump’s tariff policies and their potential market impact.

The January CPI report showed:

Headline CPI YoY: +3.0% (vs. 2.9% expected).
CPI MoM: +0.5% (vs. 0.3% expected).
Core CPI MoM: +0.4%, YoY: +3.3%, both exceeding forecasts.

Following the release, rate cut expectations shifted, with markets now pricing in only one 25-basis-point cut in 2024, postponed from September to December.

Market Outlook

Goldman Sachs analyst Whitney Watson commented:”Today’s inflation data further solidifies the Fed’s cautious stance. A resilient labor market gives the Fed room to be patient. We expect rates to remain unchanged at the next meeting.”
AI stock AppLovin skyrocketed 29% in after-hours trading, after delivering better-than-expected Q4 earnings and a strong outlook.
AppLovin was one of 2023’s top-performing tech stocks, surging over 700% last year, driven by its AI-powered advertising platform.

US Markets Highlights

Tech stocks showed mixed performance:
- Intel soared over 7%, hitting its highest close since December, after reports that the US government may support a partnership between Intel and TSMC. The plan could involve spinning off Intel’s foundry business into a jointly owned entity operated by TSMC.
- Tesla rose over 2%, snapping a five-day losing streak.
- Netflix and Apple gained over 1%, while Meta extended its record rally with an 18-day winning streak.
- CVS Health surged 15%, marking its best single-day performance since 1999.
Chinese stocks (ADRs) surged, hitting multi-month highs:
- The Nasdaq Golden Dragon China Index gained 2.73%, its highest close since October 8, 2023.
- EHang soared over 21%.
- Alibaba jumped nearly 5%, reaching its highest level since July 2022.
- Xiangshang Rongke rose nearly 12%, while Bilibili climbed over 6%.
- Li Auto, NIO, and Baidu advanced over 4%, while XPeng and NetEase gained over 3%.

Technical Analysis of US Markets

US Markets Snapshot

Dow Jones: -225.09 points (-0.50%), closing at 44,368.56.
Nasdaq: +6.09 points (+0.03%), closing at 19,649.95.
S&P 500: -16.53 points (-0.27%), closing at 6,051.97.

Hong Kong Markets Highlights

All three major Hong Kong indices opened higher:

Tech stocks led gains:
- Baidu surged over 7%.
- Alibaba and Meituan rose nearly 4%, while Tencent gained nearly 1%.
Strong performing sectors:
- Healthcare stocks rallied, with Alibaba Health jumping over 8%.
- Sportswear stocks gained, with Li Ning up nearly 4%.
Lagging sectors:
- Apple supply chain stocks fell, with BYD Electronics dropping nearly 5%.
- Chinese brokerage stocks were weak, as CICC and China Galaxy Securities declined over 2%.

Baidu’s Surge & AI Expansion

Baidu’s stock jumped over 7% after the company announced that its Ernie AI chatbot (Wenxin Yiyan) will be fully free for all users starting April 1.
Ernie’s ongoing improvements and cost reductions have positioned Baidu as a key AI player in China.

Technical Analysis of Hong Kong Markets

HK Markets Snapshot

Hang Seng Index: +1.52%, closing at 22,191.01.
Hang Seng Tech Index: +1.50%, closing at 5,360.50.
China Enterprises Index: +1.34%, closing at 8,165.83.

A50 & China A-Share Markets Highlights

A-shares opened lower, with broad-based declines across sectors.

Total Market Turnover: ¥11.7 trillion, an increase of ¥1.49 trillion from the previous session.
Market Breadth:
- 3,700 stocks declined, signaling weak investor sentiment.

Top Performing Sectors:

Cinema stocks extended gains, led by Light Chaser Animation, which surged over 15% to a record high.
Liquor stocks rebounded, with Yanshi Co. hitting the daily limit-up, while Shanxi Fenjiu, Jinzun Liquor, and Shui Jing Fang also advanced.
Pork producers rallied, as Zhenghong Technology, Shen Nong Group, and Juxing Agriculture hit limit-up levels.

Underperforming Sectors:

AI equipment, robotics, and semiconductors saw heavy selling, with some previous high-flying stocks pulling back.
Megvii Technology, Zhejiang Digital Culture, and Zhaowei Machinery all dropped sharply, hitting intraday limit-down levels.

Technical Analysis of China Markets

China Markets Snapshot

Shanghai Composite Index: -0.12%, closing at 3,342.22.
Shenzhen Component Index: -0.47%, closing at 10,658.19.
ChiNext Index: -0.30%, closing at 2,185.28.

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